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If money is invested at r percent interest, compounded [#permalink]
20 Jan 2008, 09:37

If money is invested at r percent interest, compounded annually, the amount of the investment will double in approx.70/r years.If pat's parents invested $5'000 in a long term bond that pays 8 percent interest, compounded annually, what will be the approx total amount of the investment 18 years later, when Pat is ready for college?

A. $20,000 B. $15,000 C. $12,000 D. $10,000 E. $9,000

Expln : 2P = P ( 1+ r/100)^70/r As per coumpond interest on value P after 70/r years

2= ( 1+ r/100 ) ^ 70/r

Now for 18 years problem final amount = 5000(1+8/100)^18 Put r=8 in above equation and (1+8/100)^9 appx equal to 2 so final amount is 5000 x 2 x 2 =20000